The euro zone’s combined current account surplus narrowed sharply in March, largely due to a significant decline in the trade surplus, according to data released by the European Central Bank on Thursday.

The current account surplus, adjusted for seasonal and working-day factors, fell to €14.9 billion in March from €25.6 billion in the previous month.

However, based on unadjusted data, the surplus widened to €24.1 billion from €21.7 billion a month earlier.

The ECB said the current account recorded a €15 billion surplus in March 2026, down from €26 billion in the previous month.

Trade surplus decline pressures the current account

According to the ECB, the decline in the current account balance was driven mainly by a drop in the euro area’s trade surplus, which was likely linked to higher energy costs.

The euro area posted surpluses in several major categories during March.

Goods recorded a surplus of €14 billion, while services also posted a €14 billion surplus.

Primary income contributed an additional €2 billion surplus.

These gains were partly offset by a €16 billion deficit in secondary income, the ECB said.

The ECB’s Chart 1, which tracks the euro area current account balance in seasonally adjusted terms, showed a notable monthly decline in the overall surplus during March.

Annual surplus declines from the previous year

Over the 12 months to March 2026, the euro area current account surplus amounted to €275 billion, equivalent to 1.7% of euro area gross domestic product.

This marked a decline from the €368 billion surplus, or 2.4% of GDP, recorded one year earlier.

The figures indicate that the euro area’s external balance weakened over the past year despite continuing surpluses in goods and services trade.

Portfolio investment flows remain strong

The ECB also released details on developments in the financial account.

In the 12 months to March 2026, euro area residents’ net acquisitions of non-euro area portfolio investment securities totalled €779 billion.

At the same time, non-residents’ net acquisitions of euro area portfolio investment securities reached €981 billion.

The data highlighted continued cross-border investment activity despite the decline in the current account surplus.

ECB highlights March balance details

The ECB said the euro area current account balance in March reflected mixed contributions across different sectors of the economy.

While goods and services continued to support the balance, weaker trade dynamics and the deficit in secondary income weighed on the final figure.

“The current account of the euro area recorded a surplus of €15 billion in March 2026, a decrease of €11 billion from the previous month,” the ECB said.

It added that “surpluses were recorded for goods (€14 billion), services (€14 billion) and primary income (€2 billion). These were partly offset by a deficit for secondary income (€16 billion).”

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Zimbabwe’s gold-backed currency, ZiG, has held steady this year as adoption continues and the country’s economy improves. The USD/ZWG pair was trading at 26.22 on Thursday, inside a range it has remained at in the past few months.

Zimbabwe ZiG stable as the central bank calls it, undervalued

ZIG, a currency backed by gold and foreign currency, has become one of the most stable currencies in Africa. It started the year trading at 25.9 and has now risen slightly to 26.22. It has largely moved in a horizontal direction for the most part of the year.

In a recent statement, the head of Zimbabwe’s central bank argued that it had become highly undervalued. He estimates that it is cheap by about 50%, pointing to the improving economy and growing usage.

One potential catalyst for the Zimbabwe ZiG is that the country’s economy has made some steady recovery in the past few months. The International Monetary Fund (IMF) estimates that the economy will grow by 5% this year, helped by the agricultural sector.

For example, the critical tobacco industry is experiencing a boom, with exports rising to over 83 million kilograms by late April. At the current prices, the tobacco sales were worth over $545 million. It was a 66% surge from the same period a year earlier.

The same boom is happening in the mining industry, where the country is benefiting from the higher gold and platinum prices. While the two metals have dropped recently, they remain much higher than where they were a few years ago. 

This is benefiting the country by bringing more foreign exchange. It is also benefiting the ZiG currency that is backed by gold. Indeed, the country’s sovereign wealth fund is now raising $250 million to boost gold production to boost the economy.

The main challenge for the economy is the ongoing Iran war that has pushed energy prices much higher. ZERA, the energy regulatory authority, has boosted petrol prices, a move that has boosted inflation. 

Petrol prices have now jumped by over 50% since the war started in February. Before that, Zimbabwe’s inflation dropped to single-digits for the first time in decades.

Government plans to boost ZiG currency usage

Still, despite the stable ZiG currency, most people in Zimbabwe prefer using the US dollar. That’s because many of them, together with local businesses, have seen several Zimbabwe currencies collapse. Today, the dollar accounts for over 70% of all transactions.

The government aims to transition to ZiG in the next few years. By having a usable local currency, it hopes that the central bank will be able to intervene whenever shocks such as high inflation emerge. 

Still, the main challenge is that the government and the central bank will need to convince people and businesses about its stability. For one, officials will need to prove that they will not start printing the currency to fund the deficit. 

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A last-minute pay agreement at Samsung Electronics has helped avert a strike at the company’s largest chip production complex, bringing relief to South Korea’s semiconductor industry while exposing growing divisions among workers over bonus payouts.

The deal, reached after rising tensions between management and labour unions, comes as Samsung’s semiconductor business continues to benefit from booming demand for artificial intelligence chips.

While the company’s strong profits raised expectations for higher compensation, the agreement has sparked frustration among employees in less profitable divisions who believe the rewards have been distributed unevenly.

Around Samsung’s sprawling semiconductor campus southwest of Seoul, reactions ranged from optimism among local businesses to resentment among workers who felt sidelined by the bonus structure.

Bonus disparities spark frustration

While the agreement has prevented a strike, it has also highlighted widening divisions among employees across Samsung’s chip divisions.

Some workers in the company’s memory chip unit are reportedly set to receive bonuses of around $416,000.

The scale of those payouts has sparked frustration among workers in less profitable divisions, particularly in the foundry business focused on logic chips.

“It looks like those who can switch to SK Hynix will keep applying, while others will try to transfer internally to the memory division,” he added, requesting anonymity due to the sensitivity of the issue.

At rival chipmaker SK Hynix, some employees reportedly received performance pay packages last year that were three times larger than those paid to Samsung workers.

The disparity has contributed to growing dissatisfaction among Samsung employees and encouraged some workers to move to SK Hynix.

Local businesses cautious over economic impact

Despite hopes of increased spending in the area, some residents and business owners remain sceptical that the agreement will significantly benefit the wider economy around the campus.

Samsung’s Pyeongtaek campus employs around 14,000 workers.

However, a local real estate agent said the economic impact may remain limited unless more employees choose to live in the city permanently, and because a large portion of the bonuses will be paid in shares rather than cash.

Another employee in Samsung’s contract chip manufacturing business said he was still inclined to support the agreement despite concerns over unequal treatment between divisions.

Relief over avoided strike

Some workers and subcontractors expressed relief that a strike now appears unlikely, although concerns remain over the financial burden the agreement could place on the company.

Jang Sung-hyun, 47, who works for a Samsung subcontractor, said he was relieved that operations would continue uninterrupted but questioned whether the union’s demands had become excessive.

Meanwhile, reactions on an online union forum appeared more supportive of the agreement and the union’s negotiating efforts.

Some users praised union representatives for resisting pressure from both Samsung and the government during negotiations.

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Economic activity in the euro zone contracted at its fastest pace in more than two-and-a-half years in May as rising living costs linked to the ongoing war weighed heavily on demand, particularly in the services sector, according to surveys released on Thursday.

Data from S&P Global showed the Flash Euro Zone Composite Purchasing Managers’ Index (PMI) fell to 47.5 in May from 48.8 in April.

A PMI reading below 50.0 indicates a contraction in business activity.

The latest figures signalled a second consecutive month of decline across the euro zone’s private sector economy.

Germany and France see worsening business conditions

Weakness was seen across the euro area’s major economies.

Private sector activity in Germany contracted for a second straight month in May, while in France the headline PMI dropped to its lowest level in five-and-a-half years.

Businesses in France frequently cited fuel and energy cost pressures, along with broader economic uncertainty, as reasons for reduced output.

Outside the European Union, companies in United Kingdom also experienced their broadest decline in activity in more than a year.

Firms pointed to the economic fallout from the Iran war and domestic political uncertainty as key challenges.

Consumer confidence in the euro area also weakened further during the month, according to figures expected later on Thursday.

Services sector suffers steep decline

Demand conditions deteriorated sharply across the euro zone during May.

New orders across the private sector fell at their fastest pace in 18 months.

Export demand, including intra-euro zone trade, recorded its steepest decline since January 2025.

The services sector was hit particularly hard. Services activity contracted at its fastest pace since February 2021, reflecting weakening consumer demand across the bloc.

The Flash Services PMI dropped to 46.4 in May from 47.6 in April, despite expectations for a modest increase.

New business in the services industry fell sharply, while manufacturing demand, which had improved in April, returned to contraction territory.

Meanwhile, the manufacturing PMI eased to 51.4 from 52.2 and remained below market expectations.

The manufacturing output PMI, which contributes to the composite reading, declined to 51.0 from 52.3.

S&P Global said some manufacturing data may have been artificially elevated because supply disruptions extended delivery times for factory goods to levels last seen during the COVID-19 pandemic.

The disruptions were linked to the US-Israeli war with Iran and the closure of the Strait of Hormuz shipping route.

Inflation pressures intensify

The surveys also showed a sharp rise in cost pressures.

Input price inflation accelerated to a three-and-a-half-year high in May, according to the composite PMI data.

Prices charged by businesses to customers also rose at their fastest pace in 38 months, though only marginally faster than in April.

S&P Global warned that the latest price indicators pointed to inflation running close to 4% in the coming months.

The European Central Bank kept interest rates unchanged last month but debated the possibility of raising rates to combat persistent inflation pressures.

Policymakers also signalled that a rate increase could be delivered in June.

ECB policymaker Olli Rehn said in an interview that the central bank may raise interest rates to preserve credibility amid a war-driven increase in fuel costs, although he noted there was limited evidence that high inflation was becoming deeply rooted in the euro zone economy.

Official data released on Wednesday showed inflation in the euro area remained at 3.0% in April, above the ECB’s 2.0% target.

Labour market weakens as firms cut jobs

The euro zone labour market continued to deteriorate during May.

Companies reduced headcount for a fifth consecutive month, with the pace of job cuts reaching its steepest level since November 2020.

Excluding the pandemic period, the decline was the largest since August 2013.

Services firms reduced staffing levels for the first time since early 2021, while manufacturing companies continued to shrink payrolls.

Business confidence also weakened significantly.

Overall sentiment dropped to a 32-month low, while confidence among services firms fell to its weakest level since September 2022.

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Samsung Electronics is facing the threat of a large-scale labour strike after bonus payment talks between management and the company’s union collapsed.

The strike, scheduled to begin on Thursday, could have major implications for South Korea’s economy and the global supply of memory chips.

Around 48,000 workers are expected to participate in the planned 18-day walkout.

The scale of the strike has prompted discussions over whether the South Korean government could issue an emergency arbitration order to halt the industrial action temporarily.

Government says talks can continue

A South Korean government official said on Wednesday that discussions around an emergency arbitration order were premature.

The official added that there was still room for dialogue between Samsung Electronics and the labour union.

The government is generally viewed as labour-friendly under President Lee Jae Myung, who previously worked as a youth labourer and suffered injuries while on the job.

However, Lee criticised what he described as excessive demands from a union during a cabinet meeting on Wednesday.

He said a certain union was crossing the line by demanding a share of a company’s operating profit before income tax payments were made.

“There is a role for the government when anyone crosses the line to make sure they conduct themselves responsibly for the good of the larger community,” Lee said during the meeting.

What does an emergency arbitration order mean

South Korea has used an emergency arbitration order only four times in modern history.

Such a measure would suspend the strike for 30 days while both sides continue negotiations under mediation from the National Labor Relations Commission.

The government can invoke the order if authorities determine that a strike could cause “significant injury to the national economy”.

If mediation efforts fail, the dispute would move to a separate arbitration panel.

The panel would hear arguments from both sides before issuing a legally binding decision.

Under South Korean law, individuals who refuse to comply with the order could face up to two years in prison or fines of up to 20 million won, equivalent to around $13,300.

The last time the measure was used was in 2005 during a strike by Korean Air pilots.

The dispute ended after four days when both sides agreed on a compromise wage increase.

Economic concerns grow over Samsung disruption

The potential strike has raised concerns because Samsung Electronics plays a central role in South Korea’s economy.

The company accounts for nearly a quarter of the country’s exports and is also the world’s largest memory chip manufacturer.

Any major disruption to production could affect global semiconductor supply chains, particularly at a time when demand linked to artificial intelligence has already caused chip shortages.

An unnamed official from South Korea’s central bank warned that, in a worst-case scenario, the strike could reduce the country’s projected economic growth for the year by 0.5 percentage points.

The current growth forecast stands at 2.0%.

South Korean officials have also estimated that severe production disruptions at Samsung Electronics could result in daily losses of up to 1 trillion won, or around $665 million, for the company.

Political risks ahead of local elections

The labour dispute could also carry political implications ahead of South Korea’s local elections on June 3, when voters will elect mayors and governors nationwide.

President Lee’s liberal bloc is currently expected to perform strongly in the elections.

However, the ongoing strike threat could influence swing districts and affect labour support, which has traditionally backed liberal candidates.

Lee is also seeking support in Gyeonggi province, an economically important region where thousands of workers are employed at Samsung facilities.

Samsung’s labour union was established only two years ago and is not affiliated with any of South Korea’s major labour federations.

Despite that, several established and more militant unions have pledged solidarity support for Samsung workers during the dispute.

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